ITO WD 19(3)(3), MUMBAI v. PRITHVI NIKUL JARIWALA, MUMBAI

ITA 5623/MUM/2012 | 2008-2009
Pronouncement Date: 31-10-2013 | Result: Dismissed

Appeal Details

RSA Number 562319914 RSA 2012
Assessee PAN AANPJ3883B
Bench Mumbai
Appeal Number ITA 5623/MUM/2012
Duration Of Justice 1 year(s) 1 month(s) 24 day(s)
Appellant ITO WD 19(3)(3), MUMBAI
Respondent PRITHVI NIKUL JARIWALA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 31-10-2013
Assessment Year 2008-2009
Appeal Filed On 06-09-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHRI H L KARWA PRESIDENT & SHRI N K BILLAIYA ACCOUNTANT MEMBER ITA NO.5623/MUM/2012 FOR ASST. YEAR: 2008-09 INCOME TAX OFFICER - 19(3)(3) ROOM NO.303 PIRAMAL CHAMBERS LALBAUG MUMBAI 400012 VS. SHRI PRITHWI NIKUL JARIWALA 19 PERIN VILLA UNION PARK PALLI HILL BANDRA(W) MUMBAI 400050 PAN:AANPJ 3883B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJEEV JAIN RESPONDENT BY : SHRI TEJAS SODHA DATE OF HEARING : 31.10.2013 DATE OF PRONOUNCEMENT : 31.10.2013 O R D E R PER H L KARWA PRESIDENT : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE CIT(A)-30 MUMBAI DATED 26/06/2012 RELATING TO A. Y. 2008-09. 2. IN THIS APPEAL THE REVENUE HAS TAKEN THE FOLLOW ING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DIRECTING TO ALLOW THE COST OF INFLATION INDEX FROM A.Y.1994-95 IN WHICH THE PREVIOUS OWNER FIRST HELD THE PROPERTY WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE BEC AME THE OWNER OF PROPERTY IN THE F.Y. 2007-08. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT T HE EXPLANATION (III) TO SECTION 48 CLEARLY STATES THAT THE COST INFLATION I NDEX SHALL BE ADOPTED FROM THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE. 2 ITA NO.5623/MUM/2012 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THE FACT TH AT THE DECISION OF THE SPECIAL BENCH OF THE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF MANJULA J. SHAH [35 SOT 105 (MUM) SB] HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT D URING THE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD IMMOVABLE PR OPERTIES (FLAT NO.1 & 2) JOINTLY OWNED BY HIM ALONG WITH OTHER TWO ME MBERS FOR A CONSIDERATION OF RS.6.00 CRORES TO SHRI SARVERATAN VARMA VIDE AGREEMENT DATED 15/10/2007. THESE FLATS WERE ORIG INALLY PURCHASED BY NIKUL JARIWALA FAMILY TRUST CREATED BY HARIHAR JARIWALA ON 30/11/1994 UNDER HIS LAST WILL AND TESTAMENT THRO UGH THEIR MANAGING TRUSTEE MRS. JYOTI NIKUL JARIWALA AND MR. UDAY N. JARIWALA AND MR. PRITHVI NIKUL JARIWALA. BY INDENTURE MADE ON 8/10/ 2007 BETWEEN JYOTI NIKUL JARIWALA AND MR. PRITHVI NIKUL JARIWALA BEI NG THE TRUSTEES OF NIKUL JARIWALA FAMILY TRUST TRANSFERRED THE PROPERTY TO MRS. JYOTI NIKUKUL JARIWALA MR. UDAY JARIWALA AND MR. PRITHVI NIKUL J ARIWALA THE BENEFICIARIES EQUALLY. THE COST OF ACQUISITION CONS IDERED BY THE ASSESSEE WAS THE COST OF PURCHASE BY THE PREVIOUS O WNER I.E. RS.2 01 00 000/- AND ONE THIRD SHARE OF THE PROPERT Y CAME TO RS.67.00 LACS. THE ASSESSEE TOOK INDEXATION FOR THE PERIOD FROM 1993-94 TO 2008-09 AND INDEXATION COST OF ACQUISITION WAS TAKE N AT RS.76 43 536/- THE ASSESSING OFFICER DID NOT AGREE WITH THE ASSE SSEE FOR THE DETAILED REASONS GIVEN IN THE ASSESSMENT ORDER. THE ASSESSI NG OFFICER HELD THAT THE ASSESSEE IS NOT ENTITLED FOR ANY INDEXATIO N. ACCORDING TO HIM THE ORIGINAL ASSET WAS HELD BY THE ASSESSEE W.E.F. 8/10/2007 AS PER INDENTURE MADE BETWEEN JYOTI NIKUL JARIWALA AND MR. PRITHVI NIKUL JARIWALA. THE ASSESSING OFFICER COMPUTED THE LONG TERM CAPITAL GAIN OF THE ASSESSEE AT RS.1 33 00 000/- STATING THAT INDEX ATION SHALL BE AVAILABLE ONLY FROM THE YEAR IN WHICH ASSET WAS HEL D BY THE ASSESSEE AND NOT FROM THE YEAR IN WHICH PREVIOUS OWNER ACQUI RED THE ASSET. 3 ITA NO.5623/MUM/2012 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A). TH E MAIN PLEA OF THE ASSESSEE BEFORE THE LD. CIT(A) WAS THAT THE PREVIOU S OWNER I.E. NIKUL JARIWALA FAMILY TRUST ACQUIRED THE FLATS IN FINANC IAL YEAR 1994-95 AND THEREFORE THE INDEXATION SHOULD BE ALLOWED FROM 19 94-95. 4. LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE HOL DING THAT THE INDEXATION SHOULD BE ALLOWED FROM FINANCIAL YEAR 19 94-95. WHILE HOLDING SO LD. CIT(A) RELIED ON THE DECISION OF I NCOME TAX APPELLATE TRIBUNAL MUMBAI SPECIAL BENCH IN THE CASE OF DCIT VS. MANJULA J. SHAH (2009) 126 TTJ (MUM) (SB) 415. THE DECISION OF THE TRIBUNAL HAS BEEN AFFIRMED BY HONBLE BOMBAY HIGH COURT.(SEE (2 012) 249 CTR (BOM) 270. IN THE ABOVE CASE THE TRIBUNAL HELD TH AT THE INDEXED COST OF ACQUISITION OF CAPITAL ASSET HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASS ET. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE O F THE VIEW THAT LD. CIT(A) HAS CORRECTLY DECIDED THE ISSUE AS PER THE DECISION OF INCOME TAX APPELLATE TRIBUNAL MUMBAI SPECIAL BENCH IN THE CASE OF MANJULA J. SHAH (SUPRA) WHICH DECISION WAS AFFIRME D BY HONBLE JURISDICTIONAL HIGH COURT . HONBLE JURISDICTIONAL HIGH COURT IN THE ABOVE CASE CONCLUDED THAT WHILE COMPUTING THE CAPIT AL GAIN ARISING OUT OF TRANSFER OF A CAPITAL ASSET ACQUIRED BY THE ASS ESSEE UNDER A GIFT OR WILL THE INDEXED COST OF ACQUISITION HAS TO BE COM PUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET AND NOT THE YEAR IN WHICH THE ASSESSEE BECAME OWNER OF THE ASSE T. IN PARA 19 THE JURISDICTIONAL HIGH COURT OBSERVED THAT IF THE OBJE CT OF THE LEGISLATURE IS TO TAX THE GAINS ARISING ON TRANSFER OF A CAPITAL A SSET ACQUIRED UNDER A GIFT OR WILL BY INCLUDING THE PERIOD FOR WHICH THE SAID ASSET WAS HELD BY 4 ITA NO.5623/MUM/2012 THE PREVIOUS OWNER IN DETERMINING THE PERIOD FOR WH ICH THE SAID ASSET WAS HELD BY THE ASSESSEE THEN THAT OBJECT CANNOT B E DEFEATED BY EXCLUDING THE PERIOD FOR WHICH THE SAID ASSET WAS H ELD BY THE PREVIOUS OWNER WHILE DETERMINING THE INDEXED COST OF ACQUIS ITION OF THAT ASSET TO THE ASSESSEE. 6. IN VIEW OF THE ABOVE WE DO NOT FIND ANY INFIRM ITY IN THE FINDINGS OF LD. CIT(A) AND ACCORDINGLY WE UPHOLD T HE SAME. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST OCTOBER 2013. SD/- SD/- (N.K.BILLAIYA) (H L KARWA) ACCOUNTANT MEMBER PRESIDENT MUMBAI DT : 31ST OCTOBER 2013 VM COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T MUMBAI 4. THE CIT (A)-2 MUMBAI 5. THE DR J- BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI